Karl Popper: The Open Society And Its Enemies, Volume Two
I recently finished reading the second volume of Karl Popper's "The Open Society and Its Enemies". Below I've included a short excerpt from Popper's book which strikes right into the heart of the problem with unregulated market capitalism:
"What have we to say to Marx's analysis? Are we to believe that politics, or the framework of legal institutions, are intrinsically impotent to remedy such situations and that only a complete social revolution, a complete change of the 'social system', can help? Or are we to believe the defenders of an unrestrained 'capitalist' system who emphasize (rightly, I think) the tremendous benefits to be derived from the mechanics of free markets, and who conclude from this that a truly free labour market would be the greatest benefit to all concerned?
I believe that the injustice and inhumanity of the unrestrained 'capitalist system' described by Marx cannot be questioned; but it can be interpreted in terms of what we call the paradox of freedom. Freedom, we have seen, defeats itself, if it is unlimited. Unlimited freedom means that a strong man is free to bully one who is weak and to rob him of his freedom. This is why we demand that the state should limit freedom to a certain extent, so that everyone's freedom is protected by law. Nobody should be at the mercy of others, but all should have a right to be protected by the state.
Now I believe that these considerations, originally meant to apply to the realm of brute-force, of physical intimidation, must be applied to the economic realm also. Even if the state protects its citizens from being bullied by physical violence (as it does, in principle, under the system of unrestrained capitalism), it may defeat our ends by its failure to protect them from the misuse of economic power. In such a state, the economically strong is still free to bully one who is economically weak, and to rob him of his freedom. Under these circumstances, unlimited economic freedom can be just as self-defeating as unlimited physical freedom, and economic power may be nearly as dangerous as physical violence; for those who possess a surplus of food can force those who are starving into a 'freely' accepted servitude [contract], without using violence. And assuming that the state limits its activities to the suppression of violence (and to the protection of property), a minority which is economically strong may in this way exploit the majority of those who are economically weak.
If this analysis is correct, then the nature of the remedy is clear. It must be a political remedy -- a remedy similar to the one we use against physical violence. We must contruct social institutions, enforced by the power of the state, for the protection of the economically weak from the economically strong. The state must see to it that nobody need enter into an inequitable arrangement out of fear of starvation or economic ruin.
This, of course, means that the principle of non-intervention, of an unrestrained economic system, has to be given up."
-- Karl Popper, "The Open Society and Its Enemies, Volume Two"